Ladies and gentlemen, good day and welcome to iStar Financial’s Fourth Quarter and Fiscal Year 2011 Earnings Conference Call. (Operator Instructions) As a reminder, today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the conference over to Jason Fooks, Vice President of Investor Relations and Marketing. Please go ahead, sir.

Thank you, John, and good morning everyone. Thank you for joining us today to review iStar Financial’s fourth quarter and fiscal year 2011 earnings report. With me today are Jay Sugarman, Chairman and Chief Executive Officer; and David DiStaso our Chief Financial Officer. This morning’s call is being webcast on our website at istarfinancial.com in the Investor Relations section. There will be a replay of the call beginning at 12:30 pm Eastern Time today. The dial-in for the replay is 1-800-475-6701 with a confirmation code of 236132. Before I turn the call over to Jay, I’d like to remind everyone that statements in this earnings call which are not historical facts will be forward-looking. iStar Financials actual results may differ materially from these forward-looking statements and the risk factors that could cause these differences are detailed in our SEC reports. In addition, as stated more fully in our SEC reports, iStar disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Now, I’d like to turn the call over to iStar’s Chairman and CEO, Jay Sugarman. Jay?

Thanks, Jason, and thank you all for joining us on the call this morning. During the fourth quarter we continued our efforts to reposition and streamline the balance sheet. We sold substantially all our interest in Oak Hill Advisors at a gain and monetized other assets at or prior to maturity. We reduced overhead where possible and made investments where returns were being compelling. We continue to bring down leverage and are in the process of launching a new financing that will help address our 2012 debt maturity. Our goal through all this is to enable us to maximize the value of our diversified portfolio of assets overtime and create a stronger foundation for the company. Now while the credits markets have firmed and real estate markets have nicely recovered, we still have a large percentage of assets that do not yet generate GAAP earnings. We continue to invest in many assets that require repositioning before their full value can be realized. As a result we reported a net loss of $35 million for the quarter and a net loss of $62 million for the full year. Excluding depreciation and non-cash provisions and impairments, net income for the quarter was a positive $5 million and net income for the year was approximately positive $70 million. Liquidity remains solid at over $350 million in cash at the end of the year, helped by loan pre-payments and asset sales. We also continued selectively invest in both new opportunities and existing portfolio assets, spending just over $80 million during the quarter, with approximately $40 million coming from the new origination and senior debt acquisition, and the remainder representing add-on investments in existing portfolio assets. Lastly, on the liability side of the balance sheet. We have seen strong performance in the secured collateral pool for our 2011 secured financing facility and believe this new 2012 secured financing facility we are launching will enjoy strong performance as well. These financings together with continued asset monetizations should give us a clear runway to focus on ways to enhance shareholder value throughout the rest of the year. And as we enter 2012, our goals are to better match our asset liability profile, attract capital to our successful net lease and financing businesses, and demonstrate the growing potential in our own real estate and land development platforms. Our progress will take time with low interest rates and slowing improving macro backdrop, we believe each of these businesses can begin to move forward and position themselves for making attractive investments as we continue to strengthen the overall corporate balance sheet. And with that quick update let me turn it over to Dave for more of the details. Dave?

Thanks, Jay, and good morning everyone. I will begin by discussing our financial results for the first quarter and fiscal year 2011 before moving to investment activity and credit quality. And I will end up with an update on liquidity, including the launch of the new financing that we announced this morning. For the quarter we reported a net loss of $35 million, or a loss of $0.43 per diluted common share compared to a net loss of $67 million or a loss of $0.73 per diluted common share for the fourth quarter of 2010. The year-over-year improvement was due to lower loan loss provisions of $16 million versus $54 million for the same period last year, as well as increased earnings for equity method investments as a result of the sales of our interest in Oak Hill Advisors. This was partially offset by lower revenues from a smaller overall asset base and increased interest expense. Adjusted EBITDA for the fourth quarter was $100 million compared to $103 million for the same period last year. The year-over-year results included lower revenue from a smaller asset base, offset by increased earnings from equity method investments and lower general and administrative costs. For the full year 2011, we reported a net loss of $62 million or a loss of $0.70 per diluted common share, compared to income of $36 million or $0.39 per diluted common share in 2010. Results for the prior year included $270 million of gains, primarily associated with the sale of a large net lease asset portfolio, as compared to $25 million of such gains in the current year. In addition the year-over-year change is due to lower revenues from a smaller overall asset base, partially offset by lower provision for loan losses of $46 million versus $332 million…

Thanks, Dave. That was a lot of information in there. So why don’t we just go ahead and open it up for questions. Operator?

(Operator Instructions) And we will go to Jonathan Feldman with Nomura Securities. Please go ahead.

Good morning. Congratulations. Just was wondering, if you guys can talk about what you're seeing in terms of the condo market? Obviously it's been strong. And what your expectations are in terms of monetizing or otherwise selling the apartment residential assets that are categorized as NPL and OREO?

Jonathan, sure. We've got a pretty long track record here over the last three or four years of selling, I don't know, almost $60 million to $100 million a month. So we’ve got, in most of these markets, a pretty good sense of where pricing trends are and velocity trends. The portfolio right now is skewed more towards luxury product in our book in some of the markets that have nicely recovered. We still have some exposure in places like Phoenix which we think are finally on the cusp of turning around a little bit. We've seen nice sales velocity there at price points that we believe the market will take up quite a bit of inventory. So it's really a function in each of the markets we are in of looking at. Historically, where we see the depth of the buyer market and trying to meet that market with both the product and the pricing. We’re not looking to blow stuff out, never have. We're looking for nice consistent buyer patterns and we're seeing that in almost every market. But the luxury product is a little bit longer buy process. People tend to come back a couple more times. So we don't expect the sort of high velocity turnaround we saw in some of the markets earlier, like Hawaii and some of the properties we had down in Miami. It's going to be slow and steady but at this point it's getting fairly predictable.

Got you. And also, can you just talk about your current thoughts around the REHI assets? And I guess you've talked on recent calls about that being a longer-term opportunity, but hoping to have some more color and/or thoughts on that as we head into 2012. Any new thoughts on that topic in terms of just your ability to generate value there?

Look, I think you and most people know that the REHI portfolio is primarily made up of our land platform, as we've spent the last couple years trying to aggregate and put together a team to really help realize the value. We think it's a pretty unique portfolio at this point. It's got some well-located master plan community opportunities. It's got some urban waterfront locations. As the market is slowly building, we think many of those positions are nicely located for the demand we see coming. And I think the story, I saw it in Buffett's letter and we started to hear it on the road as we talk to capital, people are believing that the supply/demand in a lot of these markets is turning. The affordability indexes are at historic highs. The rent versus buy equation is starting to favor buy. You've got governmental pressure to try to keep rates low for new buyers. So we’re seeing a lot of dynamics that are really compelling and on top of that is this demographic wave where we see household formations inevitably are going to go up just based on the demographics underlying the next decade. So the story for our REHI is really one of riding a long demographic wave with some strong macroeconomic metrics in key markets. It still takes time. That's a business where you can't snap your fingers and make things happen. We're working closely with governmental agencies. We're working closely with building departments. So it's not something we’re expecting to see on the very near term. But over the next two, three, four, five years, we think that platform has real upside and we’re devoting resources and obviously spending the money because we believe that.

And then my final question is just around thinking about the future, sort of iStar in terms of the next phases. How are you thinking about that? How are you thinking about the growth opportunities that you see and as we look to the future where you’re not as focused on debt maturities? How do you see the next phase of the company's growth development playing out in terms of what you would like to do?

Well, I think as you heard in my comments, we need a strong foundation to work from and we’ve thought for a while that de-leveraging is one of the key components of that. So you'll see us continue to shrink the debt on the right side of the balance sheet to get to a place where we think that foundation is very strong. Once that's in place, and that will probably begin throughout this year and next year, we do think the net lease business is a great business right now. Long-term stable yields with inflation protection is an ideal investment class. We've got $4 billion of track record at very high rates of return with very low beta. So we think that business is one we want to focus on. I mentioned the land platform, we think long-duration, high multiple business in terms of capital. So we think there is a good opportunity there. I think the financing business, Jonathan, is frankly dependent on our cost of funds. We continue to see really attractive opportunities, but more in a one-off way than any single big rich vein of opportunity. And we can only really do the ones that have a high enough return profile that our cost of funds today make sense. We'd like to get that cost of funds down. We'd like to get back to being an unsecured borrower certainly in the 2013 and '14 context. But that's going to drive a lot of the financing business. So we look at the finance business, the net lease business and the real estate investment and development business and see opportunities in all three of them, but part of that is building the strong corporate foundation from which to work.

Our next question is from Joshua Barber with Stifel Nicolaus. Please go ahead.

I’m wondering if you could talk a little bit more about your cash needs for 2012. Specifically what you are budgeting for CapEx and for any additional funding commitments.

Yes, hi, Joshua. Regarding 2012, we've got some funding commitments related to existing assets. Those approximate probably about $50 million for the year. And then, as we said, there is additional capital expenditures on the net lease side as well as the OREO side that would total probably $150 million. So all in, we’re expecting $200 million in additional expenditures for 2012.

When you guys are looking at the pace of non-performing loans and foreclosures and workouts that you've seen in the last few months, obviously it picked up with the NPL list coming down significantly in the fourth quarter. How has that trended so far in the first quarter?

It's probably a little early to tell. A number of the assets that are still on that list, we're trying to resolve litigation. But we have had good success moving through the process. And some of these foreclosure processes are pretty long in the tooth now. So no real trend in the first 60 days of this year, but certainly we hope to continue to be able to resolve a majority of the assets that are there.

Okay. When you're looking at your 2012 performing loan maturities, can you give us just a general sense how many of those loans have interest reserves on them, and if that was something that had to do with the big pickup in -- well, big percentage pickup at least in watch list assets in the fourth quarter?

The watch list really was two particular situations. One really tied to European turmoil, one here domestically which has a late 2012 maturity that we’re starting to watch very carefully to understand what's going to happen at the end. So neither one really had much to do with an interest reserve. I couldn't really answer what percentage of interest reserve is attached to that one.

All right. And are there any plans for authorizing additional buybacks of shares? I had to ask, I'm sorry.

I know. We continue to believe that every day we have excess capital, we have a decision to make. In the past we have certainly thought our shares are an attractive use of those excess proceeds. We are spending as you saw a little bit of money on new transactions as well to make sure we are still a player in the marketplace. But as long as there is that kind of disconnect between share price and tangible book obviously that's something that's on the table.

(Operator Instructions) And that we will go to Michael Kim with CRT Capital Group. Please go ahead.

Just have a number of questions regarding the proposed bank debt transaction. I'm just curious, of the $1.1 billion in collateral for the proposed bank debt transaction that you announced, could you provide a breakdown between performing loans, non-performing loans, net lease assets, OREO, real estate held for investment, that would be comprised of this collateral package? Would the composition be pretty similar to the existing bank debt collateral? Or I guess conversely what would unencumbered collateral pool look like by asset type on a pro forma basis?

Hey, Mike. We've got a lender meeting on Thursday, so we’re going to probably save a lot of the details for that meeting. But I can tell you that we are big believers in not reinventing the wheel. So we think the 2011 secured financing facility was well received by the market. It was well understood. The collateral mix was something that the market found attractive. So we’re not going to vary too far from what we know that the market wants, likes, and what we've heard from a lot of our creditors they would be looking for in a 2012 deal. But let's leave it there in terms of details so we can have a formal launch on Thursday.

Sure. And I guess assuming a successful syndication to address your 2012 unsecured debt maturities, have you started to think about 2013 and '14? I guess would you look to recast the collateral package for the tranching of the existing tranche A-1 and A-2 when the call price touches down later this year?

So let me walk you through how we think about that. As I said, one of the key things we are focused on is corporate deleveraging. We think we'll be in continued deleveraging mode through the end of this year and into next year. We think we've got a very significant unencumbered asset base that gives us a lot of flexibility in terms of how we go about it. I think we also have in terms of 2013 a lot of views on, can we get back in the unsecured market. So I think right now we think there is a lot of choices, a lot of flexibility. We certainly think we'll have made a lot of progress on a number of the assets that are still transitioning. So this transaction for 2012 gives us and should give us a nice runway here to be able to take advantage of that incremental deleveraging, the flexibility from the size of our unencumbered asset base, and hopefully position us at some point here to go back to the unsecured side of the world.

Right. I guess shifting gears to the portfolio, with the improvement in the non-performing loan balance, what are your expectations for resolutions this year? I guess do you have a lot of visibility on what could be resolved through the end of the year, maybe items that might be associated with litigation. Is there a targeted balance that you would potentially share with us?

You know, it's a little bit tricky. We do track every one of them on a schedule, but you saw in the fourth quarter a bunch of things come to fruition. We don't necessarily see that same kind of point in time where a lot of them get resolved. They are going to happen over the course of the year. Some of them are going to take longer. Unfortunately, it's expensive process. We’re really not able to predict them, but we do think the trend is pretty clear, and we expect that balance to continue to go down.

Right. And I guess, I know this has been disclosed in the 10-K historically, but is there any way you could provide us with a breakout of scheduled maturities for the performing loan portfolio by year? I guess how much is scheduled to mature this year, 2013 and '14?

I think there is a schedule in the K to that effect. The last numbers I saw was just under $1 billion. Now some of that collateral is in the 2011 financing, some will likely be in 2012. So I can't break that further down for you. I think the 2012 number was something just under $1 billion.

Under $1 billion, okay. And just lastly, on the net lease assets, what was the NOI contribution I guess pro forma for some of these asset sales for 2011? Just thinking about a run rate basis for going forward?

I can't do it off the top of my head, Mike. You can assume that somewhere in the 8% to 10% cap rate zone for most deals these days. Some are going to be lower than that. Some might even be a touch higher, but it's going to end up on average in that zone. You can follow up with Jason. He'll give you a better number if you need one.

Mr. Fooks, we have no further questions.

Thanks, John, and thanks everyone for joining us this morning. Should you have any additional questions on today's earnings release, please feel free to contact me directly. John, would you please give the conference call replay instructions once again. Thank you.

Certainly. And ladies and gentlemen, this conference is available for replay. It starts today at 12.30 p.m. Eastern time, will last until March 13 at midnight. You may access the replay at any time by dialing 800-475-6701 and entering the access code 236132. That does conclude your conference for today. Thank you for your participation. You may now disconnect.